Where are the bears?

Where have all the bears vanished all of a sudden?

Till the other day, all we heard about were the bears, the bears and
the
bears. How they subverted the Bombay Stock Exchange. How they were
caught
accessing and misusing privileged information. How they deliberately
conspired to kill the euphoria created by Yashwant Sinha's
investor-friendly budget. How they drove down the stock prices to an
all
time low in their desperate greed to make more money for themselves.

It was a venal tale. Of insider trading, sordid market manipulation
and
unstoppable greed. It was about cheating investors and pulling the
bourses
down at a time when India was just about ready to prove that it is
possible
to have a market that did not catch a cold every time Nasdaq sneezed.
The
president of the Bombay Stock Exchange was forced to step down in
disgrace.
All the brokers on the board were sacked. And it appeared that once
the
bears were caught and punished, things would return to normal.

But that was not to be. All of a sudden, the story changed.

The entire focus of the media swung away from the bear cartel and their
crimes. Crimes that led to the crisis in the stock market. Crimes
that led to the sharp drop in the Sensex and huge loss of shareholder
wealth.
Crimes that led to small investors losing thousands of crores simply
because the bears wanted to trap a bull and, to achieve this, they set
up
this elaborate web of deceit and intrigue that managed to drag down the
whole stock market with the bull. It was like setting fire to an
entire
forest just to trap a wild boar. It was not shikar. It was vandalism.

Who were the victims? Ordinary middle class people who lost their
life's savings. A whole lot of brokers who were driven to penury and some to
suicide. Foreign investors who are so sick of the dirty games being
played
out on our bourses that they are happy to pack up their bags and go to
other, safer markets. Financial institutions who already have a
difficult
task trying to make money in a thin market where 6,000 shares are listed
but
only 50 are actively traded. And, of course, the regulators themselves
who were caught unawares.

Ketan Parekh has got his just deserts. He was caught with his hand in
the cookie jar and there is no way he can escape punishment for his banking
fraud. There will probably be enough evidence to also nail him for
ramping up the K-10 stocks together with the promoters of the companies. In
any case, his entire edifice is now crumbling and, if rumours are to be
believed, he is in one hell of a jam. Fine. I am sure the CBI will
also succeed in tracking down his broker friends, business associates and
political benefactors. Enough photographic evidence exists of who he
partied with, who his friends were. Maybe the investigators can follow
that trail. But the fact cannot be ignored that Parekh was the target,
not the cause of action. The cause of action lay in his entrapment. Those
who set the forest on fire.

Of course Parekh is to blame. He ramped up stocks. He misused the
banks.
He buggered the system. But the fact still remains that it was his
rivals,
the bears, who engineered the whole crash. They tanked the market.
They
drove down the technology shares. They beggared the small investors.
What
is worse, in the process they made a huge killing. Reportedly in
excess of
Rs 500 crore. You can blame Parekh. You can blame the banks he
monkeyed
around with. You can blame the financial institutions. You can blame
the
regulators. But you cannot allow the bears to go scot free by shifting
the
focus away from their crime, from the cause of action that sent
everything
into a tailspin and wiped out over Rs 50,000 crore of shareholder
wealth.

The problem with such investigations is that those who know how to
manipulate the media always get away. They have the skill and the
influence to turn away the needle of suspicion from pointing in their
direction. This is exactly what is happening here. We read long
newspaper
reports about Ketan Parekh's fabled wealth, his amazing lifestyle, the
parties he threw, the people he met, the politicians he slept with and
whose money he probably deployed on the bourses. We read how lax the
regulators were. How they turned a Nelson's eye to their favourite
market
manipulators. How the top financial institutions waltzed in perfect
step
with Parekh. I am sure many of these stories are true and need to be
investigated.

But the investigations must begin with those who felled the market.
For
they are the ones who subverted the system, who made Yashwant Sinha
look
like a fool, sending his dream budget for a toss. Their goal was
simple:
To make some quick money through mayhem. Let them not escape the
headlines now. Let them not sidestep the scrutiny. For it is they who
were the actual cause of action. Not Ketan Parekh. Not RBI, UTI or
the
SEBI. By setting off a lynching mob against Parekh and blaming these
institutions, the real culprits are now trying to escape the dragnet.
We must not let them.

For they are the ones who destroyed public wealth. And, what is worse,
made a huge killing while they were about it. Money that came from
destroying shareholder value, investor confidence, the savings of
thousands of people. You can say that is what bears are meant to do. But these
are
cruel, ruthless people who deserve punishment. Not because they short
sold
a few stocks but because they short sold India.